EU approves AkzoNobel-Axalta merger with divestment conditions

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EU approves AkzoNobel-Axalta merger

Highlights

EU approves AkzoNobel-Axalta merger contingent on divesting AkzoNobel's EEA vehicle refinish coatings business, addressing competition concerns in a market where four suppliers hold up to 90% share.
Divestment will include AkzoNobel’s dedicated EEA manufacturing site, assets, IP, and personnel, with the buyer required to already operate in coatings or related industrial sectors.
Merger completion depends on EU approval of a suitable purchaser for the divested business and ongoing compliance monitored by an independent trustee under Commission oversight.

Competition remedy centers on EEA vehicle refinish coatings

As stated by the European Commission, the approval follows an investigation that found the transaction, as initially notified, would significantly reduce competition in vehicle refinish coatings in the European Economic Area. These products are used by garages to repair damaged or used cars, with suppliers also providing the scanning and mixing equipment needed to match paint to aged vehicles.

The Commission says the market is already highly concentrated, with the four largest suppliers accounting for up to 80% to 90% of sales at EEA level and dominating most national markets in the bloc. Axalta is the EEA market leader in vehicle refinish coatings, while AkzoNobel ranks fourth, and other suppliers each hold EEA-wide market shares below 5%.

The regulator found that customers, mainly repair garages, cannot easily switch suppliers because they rely on their existing suppliers' equipment and color-matching systems. It also says efficiencies claimed by the companies were not substantiated enough, or large enough, to offset the likely harm, leading to concerns that repair garages and ultimately consumers would face higher prices.

Divestment plan and buyer approval will determine closing

To address those concerns, AkzoNobel and Axalta have offered to divest AkzoNobel's vehicle refinish coatings business in the EEA to a suitable buyer. The package includes a dedicated manufacturing site able to handle the same volumes, together with related assets, transitional services, intellectual property and staff.

The companies have also committed to finding a purchaser already active in coatings supply or operating as an industrial player in a related industry. After receiving positive feedback during its market test, the Commission concluded that the merger, as modified by the commitments, no longer raises competition concerns.

The clearance remains conditional on full compliance with those commitments, and an independent trustee will monitor implementation under the Commission's supervision. AkzoNobel and Axalta can implement the merger only after the Commission separately approves a suitable purchaser for the divested business.

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